Lodha group constructing Rs 13K cr worth commercial assets; may launch REIT in 3 yrs

New Delhi: Realty major Lodha group is constructing commercial real estate projects worth Rs 13,000 crore and may monetise these assets through REIT after completing them in the next three years, a top company official said.

The Mumbai-based developer has completed 2 million sq ft office space valuing Rs 2,000 crore. It recently sold office properties worth Rs 1,350 crore. "About 7 million sq ft commercial area is under construction valuing Rs 13,000 crore," the company's managing director Abhishek Lodha told PTI. After completing these projects over the next three years, he said the company would explore the possibilities of monetising these rent-yielding commercial assets through the Real Estate Investment Trust (REIT).

The REIT is an investment tool that owns and operates rent-yielding real estate assets. It allows individual investors to make investment in this platform and earn income. The rental income of these assets is estimated to be over Rs 1,000 crore annually. Earlier this year, Embassy Office Parks, a joint venture between global investment firm Blackstone and realty firm Embassy Group, launched the country's first real estate investment trust (REIT) to raise Rs 4,750 crore.

Unlike residential segment which is plagued with multi-year slowdown, India's office market has been performing well, driven by demand for quality work space from small and big corporates as well as startups. Seeing this demand, many real estate firms have started focusing on the development of commercial properties. Global institutional investors like Blackstone, GIC and Xander are actively buying completed commercial assets. Lodha Group is India's largest residential real estate developer by sales and construction area. The company clocked net new sales of over Rs 7,000 crore in 2018-19 with collections of over Rs 9,000 crore.

The group has a debt of about Rs 19,000 crore, of which Rs 17,000 crore is from India business and rest pertains to operations in London. In July last year, Lodha Developers got markets regulator Sebi's go-ahead to launch the initial public offer (IPO) to raise about Rs 5,500 crore. However, the company did not hit the capital market seeing bad market conditions.

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